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GIFT  OF 


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01? 


Statement  of 


Swift  &  Company 

Issued  August  19,  1918 


on 


Summary  of  the  Report  of  the 
I  Federal  Trade  Commission 


on  the 


Meat  Packing  Industry 


of  July  3,  1918 


^ 

LT\ 


~ 


ABSTRACT  OF  STATEMENT  OF  SWIFT  &  COMPANY. 

Swift  &  Company  proclaims  that  it  is  in  active  competition 
with  all  other  packers  and  can  prove  that  the  Federal  Trade 
Commission  has  failed  to  establish  its  statement  that  the  pack- 
ers are  in  combination  in  restraint  of  trade. 

Swift  &  Company  is  glad  that  it  has  developed  an  organi- 
zation which  has  been  able  to  take  care  of  war  business  and  it 
does  not  believe  that  this  is  a  time  for  the  Federal  Trade  Com- 
mission to  suggest  drastic  Government  experiments  or  to 
throw  discredit  on  an  essential  industry. 

The  Trade  Commission's  investigation  was  a  one-sided  af- 
fair; the  packers  were  given  no  chance  to  present  their  side 
of  the  case;  the  report  is  so  constructed  that  it  imparts  a 
glamour  of  importance  and  significance  to  matters  that  are 
trivial;  the  whole  report  is  biased  and  presents  many  mat- 
ters in  a  false  light. 

The  Commission  presents  only  such  facts  as  it  could  use  by 
adroit  construction  and  inference  to  appear  to  substantiate  the 
thesis  it  set  out  to  prove.  It  omits  scores  of  salient  facts 
which  prove  that  the  packers  are  in  competition  with  each 
other;  that  the  profits  are  so  small  as  to  have  practically  no 
effect  on  prices;  that  the  packers  have  performed  an  indis- 
pensable service  to  the  country  during  peace  and  war  times. 

The  Commission  failed  to  mention  that  the  packers  are  now 
operating  under  Government  supervision  and  that  their  prof- 
its have  been  limited  by  the  Food  Administration  since  No- 
vember 1, 1917. 

In  attacking  packer  ownership  of  stockyards,  the  Commis- 
sion does  not  explain  that  the  principal  reason  why  packers 
have  become  interested  in  stockyards  has  been  to  provide 
proper  and  efficient  facilities  for  the  care  and  sale  of  live  stock. 
Such  ownership  gives  no  control  over  prices.  Swift  &  Com- 
pany would  be  willing  to  relinquish  its  interest  in  stockyards 

385199 


if  the  continuance  of  efficient  operation  can  be  assured.  Stock- 
yards are  now  under  the  control  of  the  'United  States  Depart- 
ment of  Agriculture. 

Swift  &  Company  owns  refrigerator  cars  because  the  rail- 
roads refused  to  furnish  them.  Swift  &  Company  is  willing  to 
leave  it  to  the  judgment  of  the  Railroad  Administration,  which 
now  has  general  supervision  over  our  cars,  as  to  whether  serv- 
ice can  be  improved  by  the  Government's  taking  them  over. 

Analysis  of  all  the  reasons  advanced  by  the  Commission  for 
its  belief  that  the  packers  are  in  combination  with  each  other 
shows  that  not  one  of  them  is  valid.  The  Commission  bases 
its  case  primarily  on  the  fact  that  the  proportions  of  live 
stock  receipts  bought  by  the  different  packers  remain  fairly 
constant  from  year  to  year,  and  that,  therefore,  there  must 
be  an  arbitrary  division  of  receipts. 

The  fact  is  that  the  packers  are  in  such  active  competition 
with  each  other  that  not  one  of  them  is  willing  to  lose  ground 
to  the  others  in  volume  of  business  handled.  Accordingly, 
they  watch  each  other  so  closely  that  no  single  packer  is  able 
to  increase  his  purchases  inordinately. 

The  Trade  Commission's  own  figures,  however,  show  that 
Swift  &  Company  has  been  able  to  increase  its  proportion  in 
four  years  to  such  an  extent  that  it  slaughtered  about  90,000 
more  cattle  in  1917  than  If  it  had  not  increased  its  proportion 
since  1913. 

Division  of  shipments  of  dressed  meats  to  eastern  mar- 
kets, another  matter  referred  to  in  the  report,  was  abandoned 
in  1902. 

There  is  nothing  illegitimate  or  suggestive  of  conspiracy  in 
restraint  of  trade  in  the  fact  that  the  packers  have  maintained 
a  joint  fund  for  mutual  protection  from  unfair  attacks  against 
their  oleomargarine  business.  Associative  action  among  com- 
petitors for  such  purposes  is  found  in  many  trades. 

The  suggestion  that  the  Government  operate  branch  houses 


of  the  packers  as  public  markets  is  impracticable  and  vision- 
ary and  indicates  how  little  the  Trade  Commission  under- 
stands the  relation  between  branch-house  organization  and 
large-scale  packing  units,  or  the  extent  to  which  the  efficiency 
of  branch-house  operation  depends  on  skill,  experience,  and 
personal  initiative.  To  attack  branch-house  organization  as 
giving  the  large  packer  an  advantage  over  the  small  packer 
is  merely  to  attack  bigness  in  itself  with  its  resulting  efficiency 
and  indispensable  service. 

The  Federal  Trade  Commission,  even  by  purposely  omitting 
all  facts  favorable  to  the  packers,  has  failed  to  prove  that  the 
packers  are  in  combination.  They  are  in  active  competition 
with  each  other  and  have  no  control  over  prices. 


Statement  of  Swift  &  Company 

Issued  August  19,   1918 

on 

Summary  of  the  Report  of  the  Federal  Trade  Commission 

on  the 

Meat  Packing  Industry 

of  July  3,   1918 


Swift  &  Company  rejoices  that  through  its  long  experience 
in  the  packing  industry  it  has  been  able  to  develop  such  large 
and  efficient  packing  units  and  nation-wide  and  even  inter- 
national distributing  organizations  as  to  have  been  able  to 
serve  our  armies  abroad  and  the  armies  and  civilian  popula- 
tions of  the  Allies  during  this  period  of  war  emergency.  Be- 
cause of  our  extensive  facilities,  we  have  been  able  to  accept' 
orders  for  millions  of  pounds  of  meat  from  the  Food  Admin  - 
istration,  and  begin  shipment  of  such  orders  within  a  few 
hours  after  they  have  been  received. 

At  this  time,  governmental  as  well  as  industrial  energies 
should  be  centered  on  those  things  which  facilitate  our  war 
activities.  If  the  recent  report  of  the  Federal  Trade  Com- 
mission on  the  packing  industry  should  result  in  drastic  Gov- 
ernment experiments  in  the  handling  of  that  industry,  the 
results  might  be  serious  from  a  war-time  standpoint.  We  do 
not  believe  that  the  report  will  result  in  any  such  drastic  mea- 
sures ;  even  so,  it  tends  to  throw  discredit  on  an  essential  in- 
dustry ;  it  arouses  suspicions  in  the  minds  of  the  public ;  and 
it  possibly  lessens  confidence  among  live-stock  producers, 
some  of  whom  may  for  this  reason  slacken  their  efforts  to 
continually  increase  meat  production. 

The  report  of  the  Federal  Trade  Commission  states  that 
the  five  large  packers  are  in  combination  in  restraint  of  trade. 


Swift  &  Company  is  in  open  and  active  competition  with  all 
other  packers.  Although  a  department  of  the  Government 
naturally  carries  a  great  deal  of  authority  in  such  a  matter, 
and  although  the  report  of  the  Trade  Commission  may  sound 
plausible  to  a  great  many  readers, — especially  those  who  have 
never  studied  the  packing  business — we  believe  that  we  can 
prove  to  any  unprejudiced  person  that  the  facts  and  insinua- 
tions in  the  Trade  Commission's  report  do  not  substantiate  the 
charge  that  there  is  monopoly  in  the  packing  industry. 

It  should  be  understood  in  the  first  place  that  the  whole 
investigation  of  the  Trade  Commission  has  been  a  one-sided 
affair.  Probably  no  big  American  industry  has  ever  been  sub- 
jected to  such  scrutiny  without  having  been  given  an  opportu- 
nity to  present  its  side  of  the  case  or  to  explain  data  and  cor- 
respondence gleaned  from  the  private  files  of  its  executives. 
At  the  beginning  of  the  investigation,  during  the  summer  of 
1917,  the  Trade  Commission  promised  a  fair  hearing  to 
the  packers  before  any  report  was  published.  Aside 
from  five  general  questions  that  were  submited  in  writing  to 
Swift  &  Company  and  answered,  over  a  year  ago,  this  com- 
pany has  had  no  opportunity  to  be  heard.  It  has  been  an 
ex  parte  investigation  from  start  to  finish. 

The  Federal  Trade  Commission's  report  is  adroitly  con- 
structed. It  succeeds  in  imparting  a  glamour  of  importance 
and  significance  to  trivial  matters;  it  describes  occurrences 
which  are  perfectly  reasonable,  legitimate,  and  ethical  in  them- 
selves in  such  a  way  as  to  suggest  ulterior  motives  and  pur- 
poseful wrongdoing;  it  quotes  letters  and  fragments  of  letters 
in  such  a  way  as  to  give  a  totally  wrong  impression  concerning 
the  relations  between  the  large  packers;  and  it  has  failed 
to  use  hundreds  of  letters  which  might  have  been  taken  from 
our  files  showing  keen  competition  and  rivalry  among  the  pack- 
ers, where  it  took  one  that  by  sinister  construction  seems  to 
indicate  collusive  action. 


Important  Facts  Omitted. — The  investigation  of  the 
packing  industry  was  supposed  to  have  been  a  complete  and 
dispassionate  one.  Unfortunately,  however,  on  account  of  its 
one-sided  character,  it  neglects  to  mention  many  fundamental 
and  significant  facts  that  one  would  expect  to  find  in  such  a 
report. 

The  Trade  Commission  never  mentions,  for  example,  that 
the  packing  industry  has  been  operating  under  license  and  has 
had  its  profit  limited  by  the  Food  Administration  since  No- 
vember 1, 1917.  It  says  nothing  about  the  important  part  that 
we  have  played  in  the  development  of  the  live-stock  industry 
and  in  the  supplying  of  all  parts  of  the  country  with  a  con- 
tinuous supply  of  fresh  and  wholesome  meats.  It  says  nothing 
about  the  low  unit  costs  of  preparing  and  shipping  meat  to 
market  due  to  large-scale  production  and  elimination  of  waste. 
It  says  nothing  of  the  minuteness  of  our  profits  per  pound 
of  product  handled,  a  circumstance  -which  destroys  the 
popular  notion  that  packers  profits  account  for  high 
prices  of  meats. 

In  attempting  to  prove  that  the  five  large  packers  are  work- 
ing together,  the  Trade  Commission  neglects  to  mention  nu- 
merous evidences  that  active  competition  exists.  It  says 
nothing  of  the  rivalries  evident  from  correspondence  gleaned 
from  the  packers  files ;  it  says  nothing  of  the  relation  between 
live-stock  prices  and  dressed-meat  prices  and  how  their  con- 
current fluctuations  offer  as  good  an  illustration  of  the  law  of 
supply  and  demand  as  can  be  found  in  any  trade ;  it  says  noth- 
ing of  the  fact  that  packers'  profits  fluctuate  from  week  to 
week  and  that  during  the  year  ended  June  30,  1917,  Swift  & 
Company  lost  money  on  its  beef  operations  during  thirteen 
out  of  fifty-two  weeks. 

The  report  fails  to  say  that  competition  is  evident  from  the 
fact  that  retail  buyers  shop  around  from  the  branch  house 
of  one  packer  to  the  branch  house  of  another,  finding  differ- 
ences in  prices  for  qualities  desired;  it  says  nothing  about 
the  competition  of  shippers  and  speculators  in  the  principal 


8 

live-stock  markets ;  it  says  nothing  about  the  competition  be- 
tween markets  which  automatically  keeps  prices  in  line  in 
different  sections  of  the  country  and  makes  impossible  any 
manipulation  of  live-stock  prices;  it  does  not  explain  that 
fresh  meat  is  a  perishable  commodity  that  has  to  be  sold  with- 
in a  few  days  for  whatever  it  will  bring;  it  never  even  con- 
siders war-time  problems,  and  the  important  part  that  the 
packing  industry  is  playing;  in  short,  the  Commission  avoids 
the  presentation  of  all  facts  and  circumstances  that  definitely 
controvert  the  thesis  that  it  tries  to  establish. 

The  Spirit  of  the  Report. — From  a  scientific  point  of 
view,  it  is  unfortunate  that  such  an  important  Government 
document  should  so  definitely  reflect  the  temper  of  its  au- 
thors, and  should  contain  such  glaring  instances  of  prejudice. 
Before  analyzing  the  main  body  of  the  report,  the  following 
enumeration  of  some  of  the  most  conspicuous  examples  of 
misleading  presentation  of  facts  will  serve  to  illustrate  the 
spirit  in  which  the  report  was  prepared. 

On  page  14,  it  says  that  "  Armour  is  the  only  one  of  the 
big  packers  who  appears  to  be  interested  in  the  grain  trade, 
although  James  A.  Patten,  a  large  stockholder  of  Swift  & 
Company,  is  also  one  of  the  important  factors  in  the  cereal 
markets. "  The  implication  is  that  Swift  &  Company  has  in- 
terests in  the  grain  trade.  Mr.  Patten  happens  to  be  a  stock- 
holder of  Swift  &  Company  for  investment  purposes,  just  as 
he  is  a  stockholder  in  other  corporations.  He  has  nothing  to 
do  with  the  management  of  Swift  &  Company,  and  Swift  & 
Company  has  no  interest  in  the  grain  trade. 

On  page  39  (and  referred  to  on  page  9)  there  is  reproduced 
part  of  a  letter  written  by  a  committee  of  "confidential  em- 
ployes" of  Swift  &  Company  before  the  Trade  Commission 
investigation  began,  in  which  it  is  said,  "We  believe  that  as 
it  stands  today,  nothing  could  stop  criminal  prosecutions. " 
The  inference  is  that  representatives  of  the  packers  believed 
themselves  guilty  and  subject  to  prosecution ;  the  fact  is  that 


all  this  committee  meant  was  that  the  attitude  among  certain 
stock  raisers  and  among  radical  congressmen  in  Washington 
was  such  as  to  indicate  that  they  would  probably  attempt  to 
bring  about  criminal  prosecution. 

On  page  41,  the  Trade  Commission  gives  the  three  follow- 
ing principal  causes  of  violent  fluctuations  in  the  price  of 
live  stock :  first,  collusive  manipulation  by  the  packers ;  second, 
disagreements  among  the  packers;  third,  raising  prices  in  a 
particular  market  to  keep  out  a  competitor.  Lack  of  evidence 
to  substantiate  these  reasons  will  be  shown  in  this  analysis ; 
the  matter  is  mentioned  here  to  indicate  the  absolute  failure 
of  the  Commission  to  consider  the  fundamental  economic 
principles  underlying  the  formation  of  market  prices,  such  as 
fluctuating  receipts  of  live  stock  and  the  varying  demand  for 
meat. 

In  connection  with  this  question  of  price  fluctuations,  the 
Commission  quotes  on  the  same  page  from  an  official  of  the 
American  National  Livestock  Association  to  the  effect  that 
price  fluctuations  are  serious  because  "  fully  three-quarters 
of  the  cattle  are  bought  on  the  days  of  heavy  receipts,  reduc- 
ing the  average  cost  far  below  the  average  daily  prices. "  Pre- 
vious to  recent  regulations  by  the  Food  Administration,  the 
bulk  of  receipts  arrived  at  market  on  Mondays  and  Wednes- 
days; this  quotation  infers  that  the  prices  on  those  days  are 
lower  than  the  prices  on  other  days.  The  Monthly  Crop  Re- 
port of  the  U.  S.  Department  of  Agriculture  for  January  31, 
1916,  says:  "An  examination  of  the  market  quotations  for  the 
bulk  of  sales  of  beef  cattle  by  days  of  week  indicates  that  quo- 
tations rule  highest  on  the  days  of  largest  receipts;  that  is, 
on  Mondays  and  Wednesdays,  and  lowest  on  days  of  smallest 
receipts. ' '  A  study  of  daily  hog  prices  for  1917,  as  published 
in  the  Drovers '  Journal  Yearbook,  shows  that  average  prices 
for  all  Mondays  and  Wednesdays  throughout  the  year,  were 
slightly  higher  than  the  average  prices  for  the  other  days. 
This  indicates  that  the  Trade  Commission  must  have  a  very 
imperfect  grasp  of  live-stock  prices. 


10 

The  Part  Played  by  Mr.  Heney — The  Trade  Commis- 
sion upholds  and  praises  the  work  of  Francis  J.  Heney,  who 
was  employed  as  a  special  attorney  during  the  course  of  the  in- 
vestigation. Mr.  Heney 's  sensational  methods,  his  unfair 
use  of  testimony  drawn  from  prejudiced  witnesses,  his  device 
of  holding  hearings  to  make  public  his  insinuations  without 
giving  the  packers  an  opportunity  to  present  their  side  of  the 
case,  and  his  frequent  announcement  of  serious  charges  that 
were  not  substantiated  by  fact,  are  too  well  known  to  need 
comment  here.  We  submit  that  when  the  attorney  of  the  Trade 
Commission  publicly  charges  the  packers  with  collusion  on 
Government  contracts,  whereas  the  only  basis  for  such  a 
charge  was  that  they  were  called  into  conference  by,  and  in 
company  with,  officials  of  the  Food  Administration, — confer- 
ences expressly  sanctioned  by  the  President  of  the  United 
States, — there  is  no  reason  to  expect  fair  and  impartial  re- 
sults from  that  portion  of  the  investigation  in  which  Mr. 
Heney  took  part. 

EXTENT  OF  PACKERS'  INTERESTS. 

The  foregoing  incidents,  which  might  be  multiplied  indefi- 
nitely, are  unimportant  in  themselves,  but  they  indicate  the 
general  spirit  of  the  report.  To  proceed  with  the  line  of 
argument  used,  the  Commission  tries  to  show  the  extent  of 
the  interests  of  the  five  large  packers  by  saying  that  they 
account  for  about  "70  per  cent,  of  the  live  stock  slaughtered 
by  all  packers  and  slaughterers  engaged  in  interstate  com- 
merce ; ' '  that  they  have  extensive  foreign  interests ;  and  that 
they  have  reached  out  into  other  fields  which  have  no  relation 
to  the  packing  business. 

Proportion  of  Total  Meat  Business. — The  Commission 
claims  that  the  packers  juggle  figures  by  saying  that  the  five 
largest  account  for  only  33J  per  cent,  of  the  total  meat  pro- 
duction of  the  country,  because  in  such  an  estimate  they 


11 

include  all  animals  slaughtered  on  farms.  Mr.  Hoover,  in  a 
recent  public  statement,  said  that  the  large  packers  accounted 
for  less  than  40  per  cent,  of  the  total  meat  supply  of  the 
country.  The  Com  mi's  si  on  overlooks  the  fact  that  the  large 
packers  sell  meat  in  small  country  towns  all  over  the  United 
States,  and  that  they  come  in  direct  competition  with  home- 
killed  live  stock;  also,  that  home-killed  meats  constitute  a 
potential  competition  that  affects  live-stock  and  meat  values 
in  the  most  distant  cities. 

Be  that  as  it  may,  and  assuming  that  the  five  large  pack- 
ers account  for  approximately  70  per  cent,  of  the  total  inter- 
state slaughter,  this  is  nothing  alarming  when  it  is  con- 
sidered that  this  business  is  done  by  five  companies  in  com- 
petition with  each  other — a  situation  that  will  be  established 
in  the  course  of  this  analysis.  There  are  many  industries  in 
the  country  where  a  single  corporation  accounts  for  as  large 
or  a  larger  proportion  of  the  total  output  as  do  the  five 
large  packers  together. 

The  fact  that  the  large  packers  have  heavy  foreign  interests 
will,  of  course,  be  readily  admitted,  but  this  is  of  little  con- 
sequence in  an  argument  to  prove  that  monopoly  exists.  The 
statement  that  the  packers  have  reached  out  into  other  fields, 
however,  is  worthy  of  consideration,  because  the  Commission 
implies  that  there  has  been  no  justification  for  so  doing, 
and  that  the  only  object  has  been  to  get  control  of  the  food 
supply  of  the  nation. 

Butter,  Eggs,  and  Other  Products. — Swift  &  Company 
has  gone  into  no  field  that  is  not  closely  related  to  the  packing 
industry,  either  in  the  utilization  of  by-products,  or  in  the 
utilization  of  its  vast  selling  organization,  which  was  devel- 
oped primarily  to  take  care  of  its  meat  business.  The  handling 
of  such  commodities  as  butter,  eggs,  cheese,  poultry,  and 
canned  goods,  has  been  prompted  by  the  needs  of  its  custom- 
ers, and  by  the  desire  to  use  most  economically  its  system  of 
branch  houses.  The  greater  the  volume  of  merchandise  we  can 
put  through  our  elaborate  distributing  organization,  the  lower 


12 

the  unit  marketing  costs,  and  the  smaller  the  "  spread "  be- 
tween farm  prices  and  consumer  prices,  not  only  on  butter, 
eggs,  etc.,  but  on  meats  as  well.  The  reason  that  we  have  devel- 
oped such  a  large  volume  in  these  products  is  that  we  repre- 
sent a  more  economical  and  efficient  method  of  marketing  than 
is  afforded  by  other  marketing  agencies.  Furthermore,  our 
system  results  in  direct  shipment  in  car  lots  from  country 
collecting  points  to  city  distributing  stations;  it  avoids  re- 
handling  and  reshipping,  and  the  goods  go  through  in  better 
condition;  they  are  more  uniform  in  quality;  and  there  is 
less  loss  from  waste. 

Hides  and  Leather. — The  Commission  says  that  the  large 
packers  hold  a  dominant  position  with  reference  to  hides  and 
leather  and  that  they  tan  a  large  part  of  the  leather  produced 
in  the  United  States.  The  large  packers  naturally  supply  the 
same  proportion  of  hides  as  of  animals  that  they  kill, 
or  less  than  40  per  cent,  of  the  total  domestic  supply.  Two 
or  three  of  the  largest  packers  have  their  own  tanneries 
in  order  to  insure  a  steady  outlet  icr  a  part  of  their  hides 
rather  than  be  obliged  to  depend  on  the  vagaries  of  the  hide 
market.  They  tan  less  than  25  per  cent.,  however,  of  the  leath- 
er produced  in  the  United  States. 

The  Trade  Commission  gives  a  wrong  impression  when  -it 
says  that  the  large  packers  have  an  advantage  over  independ- 
ent packers  and  butchers  because  their  hides  are  arbitrarily 
given  a  higher  grading,  as  "  packer  hides, "  whereas  the 
others  are  known  as  ' l  country  hides. ' '  This  distinction  results 
merely  from  the  fact  that  tanners  value  packer  hides  more 
highly  than  country  hides,  due  to  the  fact  that  packer  hides 
are  removed  from  the  animals  and  cured  more  skillfully  and 
uniformly,  and  hence  are  of  better  quality;  for  this  reason 
only  are  the  packers  responsible  for  the  higher  value  of  their 
hides.  The  packers  are  also  accused  of  hoarding  hides  during 
1917,  whereas  the  truth  is  that  they  sold  more  hides  than  ever 
oefore  and  got  rid  of  them  as  rapidly  as  the  market  would 
absorb  them  at  constantly  falling  prices. 


INSTRUMENTS  OF  CONTROL. 

The  Trade  Commission  argues  that  the  large  packers 
achieve  control  of  the  industry  through  ownership  of  stock- 
yards, refrigerator  cars,  and  cold  storage  plants,  through 
their  branch-house  distributive  organizations,  and  by  means 
of  interests  in  banks  and  real  estate. 

Ownership  of  Stockyards. — The  functions  of  stockyards 
are  generally  misunderstood.  They  are  market  places  sup- 
plied with  pens  for  the  animals,  and  with  watering  and  feed- 
ing facilities.  Live  stock  arrives  at  the  yards  consigned  to 
commission  men,  who  sell  to  the  buyers  of  the  packers  and 
to  shippers,  dealers,  and  speculators.  Every  packing  center 
must  have  proper  and  efficiently-operated  yards,  in  order  to 
care  for  the  animals.  The  principal  reason  that  the  packers 
have  become  interested  in  the  yards  has  been  to  provide  such 
proper  facilities.  Investment  in  stockyards,  except  in  the 
very  largest  markets,  is  not  attractive  enough  to  invite  out- 
side capital.  Packer-ownership  has  resulted  in  the  develop- 
ment of  efficient  market  places  that  would  not  otherwise  have 
existed. 

Packer-ownership  of  stockyards  gives  no  control  over  prices 
of  live  stock,  and  no  control  over  the  commission  men  in  the 
yards.  Yardage  and  feed  charges  are  reasonable,  and  they 
are  uniform  to  all  patrons.  Swift  &  Company  is  proud  of 
what  it  has  done  to  help  the  live-stock  industry,  as  well  as 
itself,  by  developing  efficient  stockyards.  Only  recently,  gov- 
ernment regulation  of  yards  has  been  established  under  the 
Bureau  of  Markets,  United  States  Department  of  Agricul- 
ture. Furthermore,  Swift  &  Company  would  be  perfectly 
willing  to  relinquish  its  interest  in  stockyards  if  the  public 
demands  it,  especially  if  the  continuance  of  their  efficient 
operation  can  be  guaranteed. 

Refrigerator  Cars — It  is  true  that  only  a  large  concern, 


with  a  nation-wide  organization,  can  think  of  operating  re- 
frigerator cars  in  large  numbers.  The  only  reason  that  Swift 
&  Company  ever  embarked  in  this  enterprise  was  that  the 
railroads  refused  to  furnish  the  cars.  Swift  &  Company  has 
a  fleet  of  nearly  7,000  such  cars,  and  they  form  an  integral 
part  of  the  service  rendered  the  public.  We  distribute  these 
cars  in  accordance  with  our  needs  in  various  parts  of  the  coun- 
try, and  in  order  to  facilitate  their  movement,  we  have  them 
closely  followed  up  to  see  that  none  get  side-tracked  or  de- 
layed. Swift  &  Company,  however,  would  have  no  objection  to 
their  being  taken  over  by  the  Government,  especially  as  they 
have  been  a  losing  proposition  financially  to  the  company  for 
several  years.  The  only  question  that  should  be  considered 
at  present  is  this:  Could  Swift  &  Company  ship  over  1,000 
carloads  of  meat  in  a  single  week  to  the  American  Army  at 
home  and  abroad  and  to  the  Allies  (as  it  did  during  a  recent 
week)  as  punctually  and  efficiently  under  government  owner- 
ship of  refrigerator  cars  as  under  the  present  system? 

Cold  Storage  Plants  are  necessary  in  the  handling  of 
perishable  products — especially  those  of  seasonal  production. 
The  holding  of  goods  from  seasons  of  bountiful  supply  to 
months  of  scarcity  is  an  economic  necessity,  and  is  specifically 
permitted  by  the  Food  Administration.  Swift  &  Company 
rents  space  to  other  dealers  during  those  seasons  of  the  year 
when  it  does  not  use  its  full  capacity  with  its  own  products ; 
during  the  heaviest  storage  periods  we  do  not  have  enough 
space  for  our  own  products,  and  hence  we  have  *to  store  large 
quantities  in  public  warehouses.  The  packers  own  but  a  small 
proportion  of  the  total  cold-storage  capacity  of  the  country. 

Branch  Houses. — Branch  houses  are  located  in  all  large 
towns  throughout  the  country,  and  are  necessary  for  the 
proper  holding  and  distribution  of  the  commodities  sold. 
They  are  a  necessary  adjunct  to  large  centralized  packing 
plants  because  under  this  system  goods  have  to  be  marketed 
in  far  distant  localities.  Of  course,  only  a  large  company 
can  undertake  nation-wide  distribution  through  such  branch 


houses,  but  the  branch-house  organization  in  itself  furnishes 
one  of  the  best  evidences  of  competition  among  the  large 
packers.  In  addition  to  the  five  largest  packers,  there  are 
a  number  of  others  that  are  large  enough  to  maintain  branch- 
house  selling  organizations;  in  the  large  cities  there  are  al- 
ways a  number  of  packers  represented.  Retail  butchers,  in 
buying  their  meats,  shop  around  from  the  branch  house  of  one 
packer  to  those  of  the  others,  making  their  purchases  where 
prices  are  lowest  for  the  qualities  desired. 

Banks  and  Real  Estate. — The  Trade  Commission  has 
gone  to  absurd  extremes  in  trying  to  connect  Swift  &  Com- 
pany with  important  banking  interests.  Many  of  the  banks 
listed  in  the  report,  in  which  Swift  interests  are  represented, 
are  small  neighborhood  banks,  in  which  members  of  the 
Swift  family  or  employes  of  Swift  &  Company,  have  small 
personal  investments.  In  so  far  as  those  who  are  connected 
with  Swift  &  Company  are  also  interested  in  cattle-loan  banks, 
they  are  satisfied  that  they  have  helped  the  live-stock  industry 
by  providing  borrowing  facilities  for  live-stock  raisers  and 
feeders,  and  by  popularizing  live-stock  paper.  AVe  submit 
that  there  is  nothing  in  this  charge  that  indicates  monopoly  or 
undue  control  of  live-stock  facilities;  the  same  applies  to 
the  references  to  ownership  of  real  estate. 

EVIDENCE  OF  COMBINATION. 

The  Trade  Commission  bases  its  conclusion  that  the  large 
packers  are  in  conspiracy  to  restrain  trade  on  the  ground  (1) 
that  they  are  largely  under  the  management  of  the  same  fam- 
ilies that  established  them,  and  that  ownership  rests  in  the 
hands  of  relatively  few  people;  (2)  that  they  jointly  own 
various  properties;  (3)  that  the  packers  once  had  "beef 
pools ;"  (4)  that  memoranda  from  the  files  of  Mr.  G.  F.  Sulz- 
berger  indicate  that  he  had  interviews  with  other  packers 
along  about  1913  and  1914  concerning  meat  shipments;  (5) 
that  the  percentages  of  live-stock  receipts  bought  by  the  dif- 
ferent packers  remain  approximately  constant  over  a  period 


J.D 


of  time  and  in  individual  markets;  (6)  that  the  large  packers 
divide  their  foreign  business;  (7)  that  correspondence  indi- 
cates that  one  of  the  packers  tried  to  manipulate  the  cheese 
market  in  Wisconsin;  and,  finally,  (8)  that  the  packers  main- 
tain joint  funds  to  defray  expenses  undertaken  in  common. 

The  Commission's  case  rests  on  the  accuracy  of  these 
charges,  and  the  extent  to  which  they  prove  that  the  packers 
are  actually  in  combination  with  each  other.  If  it  can  be 
shown  that  there  is  nothing  in  these  charges  to  prove  con- 
spiracy, the  elaborately  constructed  case  of  the  Trade  Com- 
mission falls  to  the  ground.  These  points  will  be  considered 
in  turn. 

(1)  That  the  management  of  the  large  packers  is  largely 
in  the  hands  of  the  families  that  established  them — a  fact 
which  is  a  source  of  pride  to  those  families — proves  nothing 
in  itself.    That  the  ownership  lies  in  the  hands  of  relatively 
few  people  proves  nothing  except  that  it  would  be  easier  for 
them  to  get  together  than  if  the  ownership  were  more  widely 
dispersed. 

(2)  The  joint  ownership  of  properties  is  greatly  exag- 
gerated by  the  Federal  Trade  Commission.    There  are  cases 
where  a  part  or  the  whole  of  the  capital  stock  of  certain  stock- 
yards, :attle-loan  banks,  and  other  facilities  is  owned  by  two 
or  more  packers.    In  other  words,  financial  resources  of  large 
packers  have  in  some  cases  been  combined  to  establish  facili- 
ties that  otherwise  did  not  exist  or  that  existed  in  imperfect 
form.    Swift  &  Company  submits  that  in  so  far  as  it  owns 
stock  in  corporations  in  which  other  packers  also  own  stock, 
this  does  not  represent  evidence  of  combination  among  the 
packers  to  restrain  trade  or  to  influence  prices.    If  there  is 
anything  in  this  that  is  incompatible  with  the  public  interest, 
we  shall  be  glad  to  make  any  adjustments  advised  by  any 
competent  and  impartial  tribunal  that  may  be  designated  by 
the  Government. 

(3)  The  fact  that  the  packers  once  had  "beef  pools"  is  not 


17 

germane.  The  "beef  pools " — that  is,  the  arrangements 
whereby  the  quantity  of  beef  that  could  be  shipped  by  each 
packer  to  various  large  eastern  markets — were  discontinued 
in  1902.  Although  public  opinion  would  probably  not  counte- 
nance such  arrangements  at  present,  they  were  undoubtedly 
of  benefit  to  the  public  at  large  in  that  they  helped  to  avoid 
recurrent  gluts  and  scarcities  in  eastern  markets,  and  tended 
to  steady  prices. 

(4)  Evidence  that  Mr.  G.  P.  Sulzberger  had  interviews 
with  the  other  packers  along  about  1913-14  is  introduced  to 
convey  the  idea  that  there  still  was  some,  control  of  meat 
shipments  at  that  time.    There  was  no  control,  or  "pool,77  or 
agreed  division  of  meat  shipments.    If  there  had  been  any  co- 
operative arrangement  for  mutual  protection,  instead  of  keen 
competition,  possibly  Mr.  Sulzberger  would  not  have  been  so 
dissatisfied  with  the  business  his  company  was  doing  as  to 
have  sold  out  shortly  afterwards  to  New  York  bankers. 

Furthermore,  the  importance  of  all  references  to  "beef 
pools,7'  so  far  as  they  have  a  bearing  on  the  present  situation, 
is  torn  down  by  the  Federal  Trade  Commission's  own  admis- 
sion on  page  26  that  "there  is  apparently  no  'dressed-meat 
pool'  at  the  present  time  such  as  existed  in  the  nineties,  for 
the  reason  that  it  would  be  as  useless  as  a  fifth  wheel  on  a 
wagon." 

(5)  Having  to  abandon  the  "beef  pool"  idea  as  proof 
of  conspiracy,  the  Trade  Commission  is  forced  to  rest  its  case 
primarily  on  the  fact  that  the  percentages  of  live-stock  re- 
ceipts bought  by  the  various  packers  remain  practically  con- 
stant.   This  circumstance,  together  with  memoranda  and  cor- 
respondence referring  to  these  percentages,  is  accepted  as 
conclusive  evidence  that  the  packers  are  in  a  definite  con- 
spiracy to  divide  live-stock  receipts  in  definite  proportions, 
and  that  this  enables  them  to  control  prices  of  live  stock  and 
prices  of  meats. 

We  admit  that  the  percentage  purchased  by  each  packer 


18 

remains  fairly  constant,  and  that,  on  the  face  of  it,  this  might 
appear  to  one  outside  of  the  packing  industry  as  suggesting 
collusion.  To  one  in  the  packing  industry,  however,  it  is 
merely  an  indication  of  keen  competition  and  rivalry  among 
the  several  large  packers. 

We,  Swift  &  Company,  are  very  jealous  of  the  other  packers 
in  the  various  markets,  and  do  not  intend  to  let  these  concerns 
increase  their  businesses  at  our  expense.  We  keep  a  weekly 
record  of  the  receipts  of  live  stock  in  the  different  markets, 
and  figure  out  the  percentage  of  total  receipts  that  we  obtain, 
and  compare  that  percentage  with  the  percentage  of  total 
receipts  for  the  same  week  during  the  previous  year.  We 
measure  our  success  in  maintaining  our  position  by  contin- 
uously making  such  comparison,  and  we  follow  carefully  what 
the  other  packers  are  doing. 

Undoubtedly,  the  other  packers  feel  exactly  the  same  way 
toward  us,  and  measure  their  success  and  progress  in  a  sim- 
ilar manner.  We  are  constantly  striving  to  increase  our  per- 
centage of  the  business,  but  any  other  packer  naturally  would 
not  willingly  permit  us  to  greatly  increase  our  percentage  of 
the  business  at  the  expense  of  his  volume. 

The  only  way  we  could  do  so  would  be  to  pay  prices  high 
enough  above  the  market  to  get  more  than  our  usual  volume ; 
but  since,  due  to  competition,  dressed  meat  is  handled  on  a 
profit  of  only  a  fraction  of  a  cent  a  pound,  it  would  be  a 
disastrous  thing  for  us  to  attempt.  Even  if  we  should  at- 
tempt it,  other  packers  would  undoubtedly  prevent  us  by 
meeting  our  competition  and  suffering  losses,  rather  than 
permit  us  to  permanently  get  part  of  their  trade. 

Viewed  in  its  proper  light,  therefore,  the  bugaboo  of  ap- 
proximately constant  percentages  turns  out  to  be  an  evidence 
of  rivalry  and  intense  competition.  On  account  of  the  close 
observation  of  each  other 's  purchases,  no  single  packer  is 
able  to  substantially  increase  his  business  at  the  expense  of 
the  others. 


19 

Nevertheless,  the  percentages  taken  by  the  different  packers 
do  vary  to  a  certain  extent  from  month  to  month,  and  from 
year  to  year.  In  the  table  shown  on  page  27,  Swift  &  Com- 
pany's percentage  of  total  cattle  purchases  increased  from 
33.90  per  cent,  in  1913  to  35.07  in  1917,  an  increase  of  1.17 
per  cent,  in  four  years ;  this  apparently  slight  increase  meant 
that  in  1917  Swift  &  Company  slaughtered  about  90,000  more 
cattle  than  if  it  had  not  increased  its  percentage  over  that  of 
1913! 

In  addition  to  this  explanation  of  the  reason  why  percent- 
ages remain  constant,  Swift  &  Company  absolutely  denies  that 
it  is  in  agreement  with  other  packers  with  regard  to  the  di- 
vision of  live-stock  receipts.  No  evidence  is  presented  by  the 
Commission  as  proof  of  such  an  agreement,  and  the  letters 
bearing  on  this  subject,  when  properly  interpreted,  indicate 
rivalry  and  a  desire  on  the  part  of  each  packer  to  at  least 
hold  his  own  in  the  different  markets. 

(6)  With  this  matter  explained,  there  remains  practically 
nothing  on  which  the  Trade  Commission  can  base  a  claim  of 
monopoly.  So  far  as  the  division  of  foreign  business  is  con- 
cerned, it  is  true  that  the  large  American  packers,  together 
with  certain  foreign  companies,  have  had  arrangements  for 
years  providing  for  the  proportion  of  total  shipments  that 
each  should  carry  between  South  America  and  England.  Such 
a  division  of  business  was  not  only  justifiable  because  it  helped 
to  make  more  regular  the  receipts  of  perishable  meats  in  Eng- 
land, but  the  arrangement  is  countenanced  by  British  law, 
and  has  nothing  to  do  with  the  problem  of  trade  restraint  in 
the  United  States.  Furthermore,  this  arrangement  is  similar 
to  the  form  of  co-operation  specifically  permitted  by  the  recent 
Webb  Bill,  which  is  intended  to  encourage  exportation  on  the 
part  of  competing  firms  in  the  United  States. 

Before  the  European  war  began  and  after  the  United  States 
import  duty  on  fresh  meat  had  been  removed,  Swift  &  Com- 
pany (through  the  Swift  Beef  Company  of  London)  made  a 
contract  with  the  Lamport  &  Holt  Steamship  Company  (a 


20 

British  company)  providing  for  a  certain  amount  of  space  to 
be  used  by  Swift  &  Company  in  shipments  from  South  Amer- 
ica to  the  United  States.  Such  a  contract  was  made  necessary 
by  the  fact  that  there  had  been  practically  no  refrigerated 
shipping  space  in  the  South  America-New  York  trade,  and 
that  Lamport  &  Holt  was  the  only  line  to  equip  itself  with  the 
necessary  refrigerated  vessels  to  give  regular  service.  This 
contract  was  made  independently  by  Swift  &  Company,  and 
does  not  represent  in  any  way  an  agreed  division  of  ship- 
ments with  the  other  packers.  Shipments  to  the  United  States 
have  been  limited  only  by  amount  of  steamship  space  offered, 
and  Swift  &  Company  has  continuously  been  in  the  market  for 
all  space  obtainable. 

Our  London  representatives  have  always  been  under  in- 
structions not  to  enter  into  agreements  with  other  packers  in- 
volving division  of  shipments  to  the  United  States.  Today 
there  are  no  shipments  of  refrigerated  meat  from  South 
America  to  the  United  States  because  of  insufficiency  of  re- 
frigerated vessels,  and  shipments  to  England  are  controlled 
by  the  British  Government. 

(7)  Correspondence  presented  by  the  Trade  Commission 
indicates  that  one  of  the  packers  had  attempted  to  influence 
the  price  of  cheese  on  one  of  the  "cheese  boards "  in  Wis- 
consin. In  quoting  this  correspondence,  an  attempt  is  made  to 
implicate  Swift  &  Company  by  stating  in  parentheses,  (with- 
out explanation  that  the  parenthetical  remark  was  added  by 
the  Commission  itself),  that  Swift  &  Company  buys  four-fifths 
of  the  sales  of  a  certain  concern  mentioned  in  the  correspond- 
ence. Swift  &  Company  has  no  financial  interest  in  the  con- 
cern named ;  it  buys  over  90  per  cent,  of  its  Wisconsin  cheese 
purchases  from  wholesale  dealers  in  whom  it  has  no  financial 
interest,  and  the  remainder  direct  from  cheese  factories.  It 
buys  none  on  the  cheese  boards  in  that  state.  It  has  never 
tried  to  affect  the  quotations  on  the  cheese  boards  and  has 
never  been  in  conspiracy  with  other  packers  or  dealers  to 
do  so. 


(8)  There  remains  only  the  statement  that  the  packers 
have  maintained  joint  funds  to  defray  expenses  undertaken 
in  common  as  proof  of  conspiracy.  It  is  true  that  the  five 
packers  have  maintained  a  joint  fund  referred  to  by  the  Trade 
Commission  as  "the  oleo  pool,"  but  the  expenses  incurred 
under  this  arrangement  have  been  to  afford  adequate  protec- 
tion against  unfair  attacks  made  against  the  oleomargarine 
business  and  the  use  of  this  product.  It  is  a  very  common 
occurrence  for  competing  manufacturers  in  various  trades  to 
adopt  associative  action  for  protective  purposes ;  we  see  noth- 
ing reprehensible  in  this  arrangement,  especially  as  it  has 
nothing  to  do  with  prices  or  division  of  business. 

There  are  other  cases  in  which  the  attorney  of  Swift  &  Com- 
pany has  prorated  the  expenses  of  the  large  packers  in  legal 
cases  where  two  or  more  packers  were  involved ;  attorneys  of 
the  other  packers  have  often  acted  in  a  similar  capacity.  We 
submit  that  there  is  nothing  in  an  arrangement  of  this  sort 
that  can  possibly  prove  that  the  packers  have  acted  in  re- 
straint of  trade. 

Conclusions  on  Monopoly. — The  foregoing  discussion 
shows  that  the  points  made  by  the  Trade  Commission  to  up- 
hold their  contention  that  a  monopoly  exists,  have  no  basis  in 
fact,  and  that  they  would  not  only  be  useless  in  proceeding 
against  the  packers  in  the  courts,  but  that  they  do  not  even 
represent  any  infractions  of  accepted  standards  of  commer- 
cial ethics.  There  may  have  been  instances  years  ago  when  the 
packers  acted  together  in  such  a  way  as  to  indirectly  curtail 
competition  and  to  affect  prices.  There  may  also  have  been 
instances  in  the  past  where  individual  packers  indulged  in 
practices  which  have  during  recent  years  come  to  be  consid- 
ered "unfair  competition."  Years  ago  they  probably  received 
reductions  from  established  railroad  rates,  just  as  shippers  of 
all  commodities  did ;  so  far  as  local  price  discriminations  are 
concerned,  however,  Swift  &  Company  has  been  very  careful 
to  reduce  prices  only  when  forced  to  do  so  to  meet  competition, 
and  not  to  destroy  competitors. 


The  packers  are  also  accused  of  abusing  their  power  by  ac- 
quiring stock  in  and  operating  "  bogus  independents. "  Swift 
&  Company  owns  stock  in  a  great  many  corporations  that  are 
not  operated  under  the  name  of  Swift  &  Company,  although 
the  policy  of  the  company  has  been  to  gradually  bring  its  in- 
terests under  that  name.  Swift  &  Company  is  interested  in 
such  corporations  not  for  the  purpose  of  carrying  out  de- 
structive competitive  policies,  but  has  acquired  them  to  ex- 
tend its  own  facilities  and  improve  its  service.  Here  again 
Swift  &  Company  would  be  glad  to  make  any  reasonable  ad- 
justments requested  by  any  independent  and  impartial  tribu- 
nal that  might  be  designated. 

If  the  Trade  Commission  has  definite  evidence  that  the  pack- 
ers are  guilty  of  unfair  trade  practices,  the  Trade  Commis- 
sion has  ample  power  to  eliminate  these  practices.  It  is  Swift 
&  Company's  policy  to  live  up  to  both  the  letter  and  the  spirit 
of  the  law,  and  we  know  that  >we  are  conducting  our  business 
honestly  and  in  active  competition  with  all  other  packers. 
We  also  believe  that  an  unprejudiced  study  of  the  Trade  Com- 
mission 's  report  and  the  foregoing  analysis  of  its  evidence  will 
prove  conclusively  that  there  is  no  ground  for  the  charge  that 
the  packers  are  conspiring  together  in  restraint  of  trade. 

RESULTS  OF  ALLEGED  COMBINATION. 

Packers'  Profits — The  Federal  Trade  Commission  says 
that  the  packers  have  extorted  excessive  profits  from  the  peo- 
ple of  the  United  States,  especially  during  war  times,  but  does 
not  explain  how  small  these  profits  are  as  compared  with  sales 
and  that  they  amount  to  only  a  fraction  of  a  cent  per  pound 
on  meats.  A  fair  interpretation  of  packers'  profits  proves 
conclusively  that  they  are  an  infinitesimal  factor  in  prices,  and 
that  the  common  impression  that  high  meat  prices  are  due  to 
packers '  profits  is  utterly  without  foundation.  It  would  seem 
that  one  of  the  vital  and  fundamental  questions  an  investiga- 


"26 

tion  of  the  packing  industry  ought  to  reveal  would  be : — What 
are  the  effects  of  packers'  profits  on  prices? 

Although  the  report  states  that  the  1917  profit  of  the  five 
large  packers  amounted  to  21.6  per  cent  of  their  net  worth, 
the  Commission  failed  to  explain  that  it  was  very  fortunate, 
not  only  for  the  packers  but  for  the  country,  that  their  earn- 
ings offered  some  assistance  in  financing  the  larger  operations 
and  heavy  high-priced  stocks  of  goods,  caused  largely  by  the 
war.  Swift  &  Company's  inventories  of  goods  in  process  and 
on  the  way  to  market  averaged  about  fifty  million  dollars  be- 
fore the  war;  to-day  they  amount  to  about  one  hundred  and 
fifty  million  dollars. 

We  do  not  consider  that  our  book  profits  of  the  past  few 
months  have  been  permanently  earned  because  they  have  been 
tied  up  so  largely  in  these  inventories  which  are  bound  to  de- 
crease in  value  at  some  time.  Only  reasonable  dividends  have 
been  paid  and  even  with  the  remainder  of  our  profit  reinvested 
in  our  business,  we  have  had  to  issue  additional  stock  to  raise 
more  funds  to  finance  operations.  The  difficulties  of  war- 
time financing  of  a  business  that  has  to  be  run  largely  on  bor- 
rowed money,  might  well  have  been  explained  by  the  Commis- 
sion in  its  report. 

Profits  have  been  only  large  enough  to  maintain  efficiency, 
and  any  drastic  reduction  of  the  profit  now  allowed  by  the 
Food  Administration  would  undoubtedly  result  in  making  it 
impossible  for  some  of  the  less  efficient  packers  to  continue  in 
business. 


RECOMMENDATIONS  OF  THE  COMMISSION. 

Live-Stock  Cars. — The  first  recommendation  of  the  Com- 
mission is  that  the  Government  acquire,  through  the  Railroad 
Administration,  all  live-stock  cars  owned  by  the  packers.  It 
intimates  that  the  ownership  of  stock  cars  gives  the  packers 
a  certain  power  of  control  and  a  manipulation  of  the  means 


24 

of  transportation.  During  1917  less  than  one  per  cent,  of  the 
receipts  of  live  stock  in  Chicago  arrived  in  stock  cars  owned 
by  the  five  large  packers.  It  is  true  that  Swift  &  Company 
owns  stock  cars  which  are  used  in  hauling  animals  from  the 
Middle  West  to  plants  on  the  Atlantic  coast  through  territory 
where  the  railroads  do  not  operate  stock  trains  as  regularly 
as  in  the  West.  These  cars  are  now  under  the  supervision  of 
the  Railroad  Administration  and  Swift  &  Company  is  perfect- 
ly willing  to  relinquish  its  ownership  if  the  Eailroad  Admin- 
istration believes  that  service  can  thereby  be  improved.  They 
form  an  extremely  insignificant  factor  in  the  operations  of 
Swift  &  Company. 

Stock  Yards. — The  second  recommendation  is  that  the 
Government  acquire  the  principal  stockyards  of  the  country 
through  the  Railroad  Administration.  As  already  explained 
on  page  13,  Swift  &  Company  has  become  interested  in 
stockyards  for  the  purpose  of  improving  marketing  facilities. 
Ownership  of  yards  gives  no  control  over  the  prices  of  live 
stock  or  the  methods  of  trading.  Although  all  stockyards 
have  recently  been  brought  under  the  control  of  the  United 
States  Department  of  Agriculture,  here  again  Swift  &  Com- 
pany would' be  willing  to  part  with  its  ownership  if  a  continu- 
ance of  the  present  standard  of  efficient  operation  can  be  guar- 
anteed. 

Refrigerator  Gars. — The  third  recommendation  is  that 
the  Government  acquire  all  privately  owned  refrigerator  cars 
through  the  Railroad  Administration.  The  reasons  why  Swift 
&  Company  owns  refrigerator  cars  were  explained,  on  page 
14.  It  is  also  pointed  out  in  that  place  that  our  cars  are  under 
the  supervision  of  the  Railroad  Administration  and  that  we 
would  be  perfectly  willing  to  relinquish  ownership  if  it  can  be 
shown  that  service  during  war  times  can  thereby  be  improved. 

Branch  Houses  and  Storage  Plants. — We  believe  that 
the  fourth  suggestion  of  the  Commission  that  the  Government 
acquire  branch  houses  and  cold  storage  plants  belonging  to 


the  packers  is  an  impracticable  one,  in  that  it  would  destroy 
individual  initiative,  result  in  poorer  handling  of  meats,  and 
prove  more  costly.  Branch  houses  are  an  essential  part  of  a 
system  of  which  large  centralized  packing  plants  are  the  basis. 
The  operation  of  a  branch  house  requires  skill  and  initiative 
on  the  part  of  an  experienced  manager,  and  the  efficiency  of 
the  organization  would  suffer  if  they  were  made  into  public 
markets  with  the  manager  responsible  only  to  the  Govern- 
ment. 

In  one  sense  the  branch-house  system  gives  the  large  packer 
an  advantage  over  the  small  packer  who  cannot  afford  such  an 
organization,  but  to  attack  the  packers  on  this  score  is  to  at- 
tack mere  bigness, — bigness  that  has  made  possible  the  de- 
velopment of  this  efficient  form  of  marketing  which  has  been 
of  inestimable  value  to  the  public  at  large. 


CONCLUSION. 

It  has  been  shown  that  the  Federal  Trade  Commission,  in 
spite  of  clever  use  of  the  complete  and  intimate  data  to  which 
it  had  access,  has  not  been  able  to  prove  that  the  large  packers 
are  in  a  conspiracy  to  restrain  trade  and  to  manipulate  prices. 
Xot  only  has  the  Commission  failed  to  establish  a  case  against 
the  packers,  but  Swift  &  Company  proclaims  to  the  world  that 
it  is  in  active  and  honest  competition  with  all  other  packers. 

The  packing  industry  consists  of  a  great  number  of  com- 
peting units, — some  large  and  some  small.  A  few  are  big 
enough  to  achieve  the  economies  and  render  the  broad  and  effi- 
cient service  resulting  from  nation-wide  organization.  Scores 
of  smaller  packers  offer  effective  competition  in  their  more 
localized,  yet  prosperous,  efforts. 

Competition ;  bigness ;  an  open  field  for  small  producers  ;— 
what  other  industry  approaches  more  nearly  the  American 
ideal  of  business  organization? 


APPENDIX. 


NEW  YORK  TIMES, 

New  York,  N.  Y. 

Aug.  10,  1918. 

However  the  matter  is  looked  at,  there  is  a  scandal  in  the  charges  against 
the  meat  packers  by  the  Federal  Trade  Commission.  If  the  charges  are  true, 
no  honest  man  would  object  to  punishment  to  fit  the  crime,  when  proved.  If 
the  charges  are  false,  the  scandal  is  in  the  publication  of  such  an  attack  on 
one  of  the  greatest  agencies  for  winning  the  war,  and  appropriate  punish- 
ment for  the  Trade  Commission's  bearing  false  witness  would  be  in  order. 
Caution  is  necessary  in  taking  the  charges  as  facts,  for  on  the  same  day 
that  the  charges  are  made,  disproof  is  published  regarding  another  scandal 
which  was  taken  as  truth  too  easily.  *  *  * 

*******3 

The  Trade  Commission's  report  is  not  necessarily  malicious,  even  if  un- 
true. It  bears  current  date,  but  really  is  a  survival  of  the  time  when  each 
city  slaughtered  for  itself.  There  are  New  Yorkers  who  remember  when 
there  were  slaughter  houses  on  almost  any  block,  and  when  it  was  a  custom 
of  school  children  to  cluster  around  them  to  see  the  sights,  while  the  blood 
filled  the  gutters.  The  Commission's  report  relates  to  that  juvenile  stage 
of  the  industry,  which  it  would  like  to  restore,  for  the  benefit  of  the  neighbor- 
hood butchers  who  have  suffered  for  the  superior  efficiency  of  central  sup- 
ply. *  *  * 


BOSTON  TRANSCRIPT. 
Boston,  Mass. 
Aug.  9,  1918. 

The  probe  of  the  packing  industry  of  the  country  by  the  Federal  Trade 
Commission  has  resulted  in  a  report  to  the  President  which  consists  of  sen- 
sational charges  and  revolutionary  recommendations. 

******** 

•  *  *  *  Now  is  not  the  time  to  discuss,  much  less  initiate  economic 
revolution  predicated  upon  conditions  that  certain  doctrinaires  believe  will 
confront  us  when  the  war  has  been  won.  It  may  be  that  the  new  world  into 
which  we  shall  then  enter  will  require  all  the  Government  acquisitions  which 
the  commission  now  urges  upon  the  President  to  make,  but  there  are  those, 
and  their  number  is  by  no  means  small,  who  prefer  before  taking  the  leap  to 
supplement  with  expert  opinion  the  quack  judgments  of  the  political  "hand- 
me-downs"  who  at  present  constitute  the  controlling  force  in  the  Federal 
Trade  Commission. 


SAN  FRANCISCO  CHRONICLE. 

San  Francisco,  Cal. 

Aug.  10,  1918. 

******** 
All  these  charges  involve  questions  of  fact  to  be  proved  or  disproved  be- 
fore a  tribunal  which  hears  evidence  on  both  sides.     *     *     * 

On  the  other  hand,  the  Trade  Commission  is  an  accusing  body  which  has 
sometimes  shown  animus,  whose  result  is  that  the  public  cannot  assume  guilt 
in  all  who  fall  under  its  condemnation.  *  *  * 


BALTIMORE  NEWS. 

Baltimore,  Md. 
Aug.  9,  1918. 

******** 
It  is  not  necessary  to  be  a  sympathizer  with  Swift  &  Co.,  Armour  &  Co., 
et  al.,  tofind  in  the  Federal  Trade  Commission's  report  on  their  business  some 
remarkable  statements  and  recommendations.     *     *     * 

These  practices,  if  actually  indulged  in  and  if  the  terms  by  which  they 
are  described  have  the  accepted  meaning,  are  covered  by  the  anti-trust  stat- 
utes *  *  *  The  Commission  uses  language  that  the  courts  have  been  un- 
able to  substantiate.  Is  that  an  advisable,  even  if  it  were  a  warrantable, 
thing  to  do  at  a  time  when  the  Government  should  be  trying  to  keep  public 
sentiment  on  an  even  keel? 

******** 


NEWARK  NEWS. 

Newark,  N.  J. 
Aug.  9,  1918. 

*  *  *  And  the  last  move — the  recommendation  of  the  Federal  Trade 
Commission  that  the  government  monopolize  all  departments  of  the  industry 
except  the  actual  packing — looks  like  a  gesture  of  despair. 

******** 

This  is  war  time,  and  the  first  need  is  to  guarantee  that  the  meat  products 
handled  by  the  five  great  major  groups  of  packers  be  kept  moving  steadily 
to  supply  the  nation's  fighters  and  civilians  and  the  nation's  allies.  It  is  not 
contended  that  there  has  been  any  lack  of  efficiency  in  the  performance  of  this 
huge  task,  which  has  been  carried  on  by  the  packers — recently  under  govern- 
mental direction.  *  *  * 


ST.  LOUIS  TIMES. 
St.  Louis,  Mo. 
Aug.  9,  1918. 

******** 
The  packing  house  matter,  however,  appears  to  be  entirely  different 
There  doesn't  seem  to  be  any  question  of  military  necessity  involved.  What- 
ever military  necessity  has  existed  has  been  met  by  the  packers  with  success 
amounting  to  a  triumph.  It  would  have  been  quite  impossible  for  Secretary 
Baker  to  move  a  million  men  to  France  and  feed  them,  to  say  nothing  of  the 
millions  of  English  and  French,  without  the  well  nigh  perfect  system  de- 
veloped through  many  years  by  American  packers. 


NEW  YORK  TRIBUNE. 

New  York,  N.  Y. 

Aug.  10,  1918. 

*  *  *  Yet  this  letter  is  not  forwarded  to  the  Department  of  Justice 
for  action  or  sent  to  Congress  with  any  recommendations.  Is  it  that  the 
President  believes  that  these  sensational  charges  are  untrue  and  unsub- 
stantiated? Are  the  packers  to  be  indicted  before  the  public  upon  ground- 
less accusations?  Are  we  to  have  a  repetition  of  the  aircraft  "scandal"  and 
the  Hog  Island  "scandal"? 

The  public  has  no'  way  of  judging  as  to  the  truth  of  these  matters.  It 
seems  as  if  it  might  expect  from  the  government  its  careful  judgment  upon 
the  charges,  instead  of  having  them  flung  about  to  inflame  all  the  dis- 
contented and  trouble  making  elements  of  the  country. 


ROCKY  MOUNTAIN  NEWS. 
Denver,  Colo. 
Aug.  9,  1918. 

******** 
*  *  *  Mr.  Heney  was  employed  by  the  Commission  to  conduct  the 
"investigation"  of  the  packing  industry  brought  by  the  Commission,  and  it 
has  not  escaped  public  memory  the  manner  in  which  he  staged  the  hearing, 
following  in  the  main  the  scenario  of  a  moving  picture  production — break- 
ing into  safes,  rushing  into  court  at  all  hours,  seizing  papers  and  other  spec- 
tacular stunts,  with  Mr.  Heney  always  catching  the  spotlight. 

When  the  preliminary  report  was  published  regarding  the  profits  of  the 
packing  companies  it  was  evident  that  the  chief  aim  was  to  make  political 


tapital  out  of  the  whole  proceedings.     Figures  under  the   adroit  handling 
of  a  Heney  can  be  made  to  tell  anything. 

******** 

This  report  is  a  political  document  to  be  used  in  the  autumn  cam- 
paign *  *  * 

Seriously,  is  it  not  time  to  call  a  halt?  Are  we  not  hastening  our  course 
toward  Bolshevism  that  laid  Russia  low  and  made  it  an  easy  prey  to  the 
enemy?  *  *  * 


CHICAGO  EVENING  POST. 

Chicago,  111. 
Aug.  13,  1918. 
*  *  *.*  *  *  *  * 

*  *     *     Political  and  economic  adventuring  is  dangerous  enough  in  days 
of  peace;  it  is  lunacy  at  an  hour  of  high  crisis  in  the  country's  history. 

*  *     *     Francis  J.  Heney  furnished  the  material  upon  which  this  re- 
port is  based  after  a  prolonged  fishing  expedition,  improperly  dignified  as  an 
investigation.     Mr.  Heney  paraded  his  catch  in  the  columns  of  the  press, 
using  the  magnifying  glass  of  his  imagination  to  make  minnows  look  like 
whales  and  sardines  like  sharks.     *     *     * 

Even  were  we  to  accept  the  construction  placed  upon  facts  and  alleged 
facts  by  Mr.  Heney,  we  would  still  find  ourselves  unable  to  agree  with  the 
conclusion  reached  by  the  Commission.  *  *  * 

******** 

On  the  other  hand,  it  may  be  shown  beyond  question  that  the  business 
of  feeding  our  army  and  navy  has  been  marvelously  facilitated  by  the  effi- 
cient methods  of  the  packing  industries.  *  *  * 


GRAND  FORKS  HERALD. 
Grand  Forks,  N.  D. 

Aug.  9,  1918. 

******** 
It  is  unfortunate,  however,  that  the  reports  of  the  Commission  on  some 
of  these  matters  have  not  alwaye  been  such  as  to  inspire  confidence  or  com- 
mand respect.  Some  of  its  pronouncements  in  connection  with  the  meat  in- 
dustry have  been  such  as  to  cause  distrust,  because  they  have  been  rather 
in  the  nature  of  appeals  to  the  emotions  than  sober  statements  of  material 
facts  which  would  aid  to  an  intelligent  understanding  of  the  situation. 


14  DAY  USE 

KETURN  TO  DESK  FROM  WHICH  BORROWED 

LOAN  DEPT. 

This  book  is  due  on  the  last  date  stamped  below,  or 

on  the  date  to  which  renewed. 
Renewed  books  are  subject  to  immediate  recall. 


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